BOJ Kuroda Gives Thumbs-Down to Bitcoin

Bank of Japan Gov. Haruhiko Kuroda said Tuesday that bitcoin doesn’t qualify as a currency.

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Three months after launching a study of bitcoin, Japan’s central bank on Tuesday reached a conclusion: The virtual currency at the center of global controversy shouldn’t be treated as a currency.

The Bank of Japan decision follows a statement by the government last week that it viewed the virtual currency as a commodity, not a financial instrument.

“At least at this moment, bitcoin does not have the qualities needed to be a currency,” BOJ Gov. Haruhiko Kuroda said at a news conference Tuesday after a two-day meeting of its policy board that presumably focused more on monetary policy issues than what to do with the increasingly problematic bitcoin.

“A currency has to be something everybody accepts as a medium of exchange, and its value has to be stable to some extent, its settlement has to be guaranteed,” Mr. Kuroda said. “I don’t think you can say (bitcoin) has such functions.”

Bitcoin first became a topic of discussion between Mr. Kuroda and reporters in late December, when he was asked at a news conference about the potential of the crypto-currency to enlarge its presence in Japan. Mr. Kuroda then sounded somewhat neutral, saying it was “a topic of great interest to us” and that the Institute for Monetary and Economic Studies—the BOJ’s research arm—was looking into it.

But Tokyo authorities have since taken steps to tighten their grip on bitcoin, especially after the recent bankruptcy of Tokyo-based bitcoin exchange Mt. Gox made headlines globally.

“I’ve never thought something like this could last long,” finance minister Taro Aso said at a regular news conference on Feb. 28. “I’ve been expecting that it would fall apart at some point.”

While giving bitcoin short shrift as a currency, that doesn’t mean the cash-strapped government doesn’t see it as an opportunity. Since it is like any other good or service, bitcoin will incur the sales tax, currently 5% and due to go up to 8%, on all commercial transactions. In addition, any gains on changes in the price will also be taxed as income, the government said.

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